Moderating Bitcoin Debates

Hi, you're listening to the Stefan Livera podcast focused on Bitcoin and Austrian economics. Today, my guest is Gene Epstein. I've got a lot of listeners who are Bitcoiners who would like more exposure to Austrian economics, so this episode will be a real treat for you. But first, let me introduce the sponsors of the podcast. So firstly, Kraken, one of the world's leading Bitcoin exchanges, they have a really strong focus on security, they are one of the longest standing Bitcoin exchanges, they're consistently rated the best, they have a high quality platform, they offer some of the best liquidity available in the industry, they've got high trading volume and low fees with no minimum or hidden fees. Kraken have twenty four seven support and on the institutional and business solution side, they are providing best in class accounting, reconciliation and reporting services for cryptocurrency hedge funds, asset managers and fund admins. Administrators. Kraken have an OTC desk for large block trades. They offer five fiat currencies and also offer margin and futures trading. So go to kraken dot com to sign up, there's a link in the show notes. Next, Unchained Capital. They're a Bitcoin financial services company offering a really cool two of three keys multi-signature vault product. You can use Trezor or Ledger. It's a web interface, it's really simple to use, and it allows you to distribute your keys. Unchained also Also offer Bitcoin collateralized loans, so you can get USD liquidity without selling your bitcoins. So consider your scenario, but this might be more tax efficient for you, meaning you can keep hodling rather than selling your bitcoins. While that loan's outstanding, it's stored under collaborative custody with Unchained. So if you wanna learn more and sign up, go to unchaineddashcapital dot com. There's a link in the show notes. Gene Epstein is director of the SoHo Forum, a really popular debate forum and Prior to this, he was economics and books editor at Barron's for twenty six years, and he has got a lot of insight to share with us in terms of Austrian economics and how some of that applies to Bitcoin. Gene, welcome to the show.

It's a, pleasure to finally meet you. is it Stefan or Steven?

Yes, Stefan.

Stefan. Well, Stefan. And, here I am in New York City at six in the evening, and you're in Australia at eight in the morning tomorrow, and that's pretty exciting in itself.

Haha, yes, it is. look, so Gene, I've, listened to many of your appearances. I'm a big fan, obviously, of Tom Woods and Bob Murphy. So I've appeared, I've And also, I'm a fan of your work, in moderating and being the director of the SoHo Forum. and I know you've got a lot to share in terms of Austrian economics, and so, yeah, I'm looking forward to discussing with you. maybe we could just start with a little bit of an intro on you and what are you working on these days with SoHo Forum?

well, the, the, the SoHo Forum, a week from, actually six days from today, New York City time, is going And, our, debater, the debater for the affirmative, it's always a one-on-one debate, the debater for the affirmative, Jacob Sullum, who's written a lot about the subject, in fact also included a book, a very good book about the subject, is gonna defend the very extreme version of the complete legalization of drugs, that while he's granting that, you may wanna have a law governing, the sale of drugs to minors, you may- They want to have a law that, governs, the use of drugs by people, driving automobiles, but beyond that, nothing, no laws against drugs at all, e-even including the sin taxes on drugs, which of course we do have for alcohol and, regrettably, for pot. So it's gonna be a very extreme view that he's gonna defend against, former New York Times journalist Alex Berenson. And so I think it should be an exciting confrontation. I myself, on November fifth, that's the s-next debate we're gonna have, we'll be debating, once again, socialism with perhaps the most eminent socialist in the country, Richard Wolff, who's written many books on the subject and, numerous articles, perhaps the leading socialist in the country. This very possibly will be my last debate with a socialist, but I definitely wanted to, to do, argumentative combat with Richard Wolff. That will be in November Fifth, are all of it in New York City.

That's fantastic. I really like, watching some of the debates. obviously I'm in Sydney, so I have to watch the online version, but, I really enjoy the debates. I think you get a lot of really high quality people, and you really moderate them well. we've, we know, in, in the, if those of Bitcoiners who have listened to some other debates know that there have definitely been some, let's say poorly moderated debates, and they, they just Strong moderation to make sure that it is well organized and orchestrated.

Well, thank you, all. That's an interesting discussion. We're gonna be discussing, I, I know you said, you were interested in the two debates I had on Bitcoin and one of the, one of the debates I had on fractional reserve banking. And so I gather we're gonna get your thoughts on those, the substance of those confrontations, and I look forward to hearing what you have to say.

So look, I think, yeah, you're right, and let's talk a little bit about,

We discussed some of the fundamentals of Austrian economics and money from, you know, the legends, Mises and Rothbard. Did you want to just give us an overview of your own thoughts on how they might apply, you know, and potentially are there any things that you believe Bitcoiners are missing or confused on? Yes.

well Again, I'm gonna assume that, your readers or your listeners rather know very little or next to nothing about the subject, and really that's okay. It's almost preferable that you haven't been brainwashed by the mainstream. I myself, you know, sleepwalked through high school and college, and, I, didn't study any economics in undergraduate school, almost luckily. But then, I was interested in socialism, and I went to the new school, and, I ended up teaching mainstream economics, to- To, undergraduates, and, by pure happenstance, I picked up a copy of, Murray Rothbard's Man, Economy, and State, and that was a game changer for me. it was kind of a funny way to get into, libertarianism, free markets, through that text, that, that two volume tome, but, because I was teaching, economics, and because I was in, interested in issues of socialism and capitalism, it was the my way in. In fact, I have an introduction, that I was privileged to write for a collection of Murray Rothbard's essays. But backing up for a moment, why are they-- why do we call that Austrian economics? Well, it came out of Austria, amazingly enough, and I can't even quite know why. What is it about the Austrians that made them so, perceptive? it's associated with Austrian economists, Ludwig von Mises, as you mentioned, and then also, Mises was a student basically of Carl Menger, another Austrian, and, And Lud and Bambauer, Lugen and Bambauer, also in Austria, and those are the three most prominent, Austrian economists who were indeed, from Austria And it was, and we have Adolf Hitler to thank, ironically, for the fact that Ludwig van Beethoven, who was a Jew, fled, Vienna, and for Switzerland, and then fled, fled Switzerland for New York City, fled Hitler. And, Ludwig van Beethoven set up shop at NYU, couldn't get a, a normal academic appointment, but he had a sub-- he did a seminar, and that seminar gradually attracted a lot of Americans, one of them was Murray Rothbard, who, of course, went on to call himself an Austrian, even though, of course, he's just a Brooklyn Jew. I'm a, I'm a, I'm a Bronx Jew, he's a Brooklyn Jew. And, and Rothbard became, in a way, you know, Plato to Mises and Socrates. Amazingly, Socrates, Mises, at the age of fifty-eight, after having published many books in German, began to write in English. amazingly, because he wrote so Who had been used to writing in German, and I highly recommend his book Human Action, written in English, plus other books. And I, in a way, I think the best name for Austrian economics is indeed Human Action. And if one, if one were to ask, what is it that distinguishes, is there Austrian economics from- Mainstream economics, well, you know, the first thing I would say is in a way, Austrian economics is a, a redundancy. what do I mean by redundancy? Whenever we naturally think about economics without being prompted, and here I'm addressing people who have no background in economics, we use the method of methodological individualism. We, we work from the individual and the individual's motivations, and we see the market as a process, as a process of trade. And error. we, we read about Jeff Bezos of Amazon, who decided that the market was deeply mistaken, to be channeling so many goods through the bricks and mortar outlet of retail, retail bricks and mortar. he foresaw that we could buy so many goods through the internet, through the mails. And so that's how he became the richest man in the world. And Bezos is now continuing to tell us that the market is still Deeply in error, because as he said, as he have said, "I can't be the merchant to the world unless I also get into food and clothing." So he said as well that all these purchases we're making, of food and clothing through bricks and mortar stores are simply inappropriate. He's gonna correct that market error. And so the market is never in equilibrium, which is the focus of the mainstream. the market is always in error, and there are always people coordinating, competing Dealing in a rivalrous fashion to readjust, the market to correct that error. So that, by the way, so that it better serves consumers and better serves those of us who work in the market, 'cause as Rothbard also said, there is no consumer sovereignty, there is only individual sovereignty. We individually, have sovereignty over ourselves, just as you, Stephan, have decided that you're gonna pursue a certain career. Nobody told you the consumer is not your boss. You've, you've said, "Well, this is what I want to do." I want to sell to the consumer. This is what I, the way I want to make my livelihood, and so you're exercising individual sovereignty, which is fundamental to Austrian economics. But now let's narrow in, hone in on how the Austrian economics applies to Bitcoin. I think it's interesting as a footnote that based upon what I read about, Satoshi Nakamoto, who was of course the, the ghost-like, originator of Bitcoin, he had some familiarity with Mises and some familiar-familiarity with Austrian economics. Well, this is in a narrow fashion, and this is ironic, if you, if you study the mainstream, then mainstream economics tells you that money has got to be managed by the The government via a central bank. They've suddenly decided that money has got to be dominated by a government institution, and this is never questioned, by the mainstream. They beca-- begin from the point that money is outside the market. It, it has to be managed by government. About this is an unexamined assumption, and of course, what's distinguished Ludwig von Mises especially is that in nineteen thirteen he wrote a book called The Theory of Money and Credit. And in which he basically understood that, that the origins of money precedes government, and that, he invented something called the regression theorem, which I think is a lovely theorem because it's an inference about history that we use money, we value money because of what we know it can buy. But how do we know it can buy anything? Well, we know because it could buy things yesterday. And then how did we know yesterday that it could buy things? Because we knew that it could buy things the day before. And then so that regresses further and further back. And then Mises asked, "Well, what happened at day zero? How did Mo-- how did anybody know that money could buy things?" And that's because, as Mises said, "Because all money originates in a commodity, as in the case of gold, it originates in gold." And there are many who have a hangup about Bitcoin because people think that Bitcoin didn't originate as a commodity. But Bitcoin was tied to the dollar, and there was a certain insight, a certain knowledge about what money could buy that made Bitcoin money. And, and then of course, famously, those pizza pies were bought by Bitcoin, and then Bitcoin became a medium of exchange. But there are now key insights that we know from the Austrians that I think are eternal, and that I wish at times, the Bitcoin enthusiasts who know often far more about the technicalities of Bitcoin than I know I wish they would take them for granted. one of those things is that money is a network commodity, it's the network commodity. and, what does that mean? It means that there is a natural tendency for, money to be the, that thing that people most want. In the case of gold, it was the thing that people most want. Gold was at that point the most suitable medium of exchange, and, and then once that happens Once that begins to catch on, then in terms of human action, people then want to hold the, the money that most other people want to hold, and then the others want to hold the most, the money that most others want to hold. And so very quickly we realize that because we want to buy the m-- hold the money, that we'll buy the most things. very rapidly, one money arises. Mises, by the way, allowed for the possibility that there might have been two monies. He, he actually- pointed out, we didn't, never really quite, quite got the historical experiment. Maybe money could have been gold and silver. Maybe there could have been two monies, the more valuable money, gold, the less valuable money, silver. But the idea that there could even be more than two or more than one, that's almost questionable. So when we know that money is a network commodity, then we begin to understand that the balkanization of money is a nation state phenomenon. The reason why we have the euro, the, the dollar The dollar, the Canadian dollar, the British pound, the yen, the Aussie dollar is because we have nation states, and those nation states often won't have control of their own money. That's why we have exchange rates of one money exchanging for another. But interestingly, interestingly, ninety percent of the transactions internationally are made in the dollar because there's a natural tendency for the market They gravitate toward one money, and the dollar is the closest thing at hand, and so that is in a way testament to the, to the Austrian insight that money isn't a network commodity. But the third, the, the, the second most important insight, and just recently I heard a very knowledgeable person on, on your show, Stephan, seemingly, imply ignorance about this other fact, which is why people hold money in the first place. Mises wrote, that the- The idea that money can ever be a store of value is only true in, in a world in which you don't have stocks and bonds, in a world in which you don't have other ways of investing your money. that money isn't ever a store of value because money isn't-- it doesn't earn anything. And if money is gonna become, let, let's say prices are falling, which indeed would happen with Bitcoin, if prices are falling, your money is gonna become more valuable a year from now, but better to invest it in stocks and bonds where it can earn- Dividends or capital gains or interest over and above that. And so Mises pointed out that we store value, those of us who aren't eccentric or nuts, we, in a, in an advanced industrial economy, we use, instruments like stocks and bonds to store value, or of course, we speculate in commodities, we speculate in real estate, all, all of those are ways of storing our value. We don't use money to store value. Again, that's for the eccentrics, you know, the Silas Marners of the world who want to store gold. Holed in their basement, because that's, obviously not the, not the most remunerative way to store value. So money isn't a store of value, and, and I think it's very unfortunate that this term has been used. Why do we hold money? This is the final insight. we hold money precisely because we live in a, in a world of uncertainty, because we never know when we're going to need a bit of money to buy something with. So we need some liquidity. But But if we're rational, we keep our liquidity to a minimum. We try to store our money in short term assets to convert it quickly, into money. It's the medium of exchange, and in, in an electronic marketplace, it-- this money can be used very efficiently, as Rothbard in particular pointed out, if there were no uncertainty, if we knew exactly what we're gonna buy every hour of the day and every day of the week, we would store all our money in short term instruments. And it would immediately, mature, and then in that instant, we'd use it to buy something with. But because-- And then we'd have a very weird world indeed. But because we live in a world of uncertainty, we do need to hold some money balances. But that's the only reason why we hold money. And that would-- Now, of course, obviously, we are speculating in Bitcoin. We're speculating in Bitcoin because by and large, Bitcoin hasn't yet become money. but let me finish my final- I'll point in my little, disquisition. my, I, I believe, and I've been persuaded by so many people I've read, you as well, some things I've listened to from you, books like the one by, Safiye and Ahmed Elmas, that, that Bitcoin, if I were to choose, if I were to vote, then if there is going to be a free market in money, and I'm gonna get to a moment why that's a possibility, then Bitcoin is probably the best candidate. It's probably the Gold was good. Gold had advantages. Bitcoin is a little better, and then maybe I could leave it to you to, to, to elaborate on why it's a bit better. And, it's a bit better, by a noticeable margin. And I think, I think that the fiscal crisis of the state, which we could get into, which I believe is likely to happen fifteen years from now, it could happen sooner, but we-- the fiscal crisis of the US state, in particular, the dominant state, because it's, because the US state is accumulating So much debt, because ten years from now, the mere servicing of the debt could cost a trillion dollars a year. I think there will be a fiscal crisis, there will be an unleashing of the printing presses, there will be the potential for, for massive inflation, not necessarily a year from now or two years from now, but ten to fifteen years from now, because it's a gradual process with the very powerful US. And once that happens, then I believe Bitcoin, the value of Bitcoin could take off, transactions in Bitcoin could take off. And for that reason, I think that my son Jim is right to say that it's judicious for the conservative person to do what he does. He buys two hundred dollars worth of Bitcoin every month, and he buys it whatever, at whatever price the Bitcoin is available at. It's a kind of a conservative, you know, income averaging, price averaging, just whatever the Bitcoin is worth, buy two hundred dollars worth of it, so that you develop a, a base, an ownership of Bitcoin at a decent price. He does it through Coinbase. I pretty much exhausted my On Austrianism and Bitcoin, but, so, so let's, let, let's hear from you for a moment.

I think there's a lot of really great insights in there for my listeners, on that, you touched on the regression theorem, you touched on the network economics aspect of it and what we can think more like network effects rather, and, I think, that to me brought to my mind this fantastic essay by Hans Simon Hopper, and he calls, it's called "How is Fiat Money Possible?" And in that, he Different, you know, if you will, trading zones around the world, but wouldn't it make more sense if there was one global trading zone as opposed to, you know, each individual currency in each individual trading zone? And I think in that essay, Hans Simon Hopper also refers back to, a, a quote from Mises in Theory of Money and Credit, and I think there's a specific paragraph, but it's something like, "One by one, commodities will be one by one rejected until we're sort of left with the most saleable one." And I think that really is The, in my view, that's the key sort of quintessential insight, and that really for me, one of my favorite essays on this is Karl Menger's On the Origins of Money, and in that essay, Karl Menger is explaining how there are- things that cause differences in the salableness of different goods, and then those differences sort of self-reinforce to the point that then there are some that are now more suitable to become a money compared to other goods that are not so suitable to become a money.

Yes, and yeah, no, indeed, I, I, you, you just quoted, I, I, I had mentioned Menger, and, and certainly Hans Heinrich Hoppe, who is a contemporary of mine, is, is certainly a very worthy- The air, one of one of the fourth party projects, and his, his writings command attention. He's, he's clearly, in, writes in that great tradition and deepens our insight about the, about these facts. Indeed, as, Happe said, we've, in a way with, with all these currencies of flow, we've, we've returned to a quasi-barter situation, although again, the market, I, I wonder if, if even Hans points out that actually the market deals with that because they don't, A currency available, but indeed we have a lot of balkanization, barter, and almost a return to barter, as, as Hans Hermann Harpiew pointed out. I just want to say negatively, negatively that what you've just said, means that if you ever have a guest on, and I think you might occasionally, have one on, who's informed about the technicalities of Bitcoin, but who's gonna say, "Well, isn't it just wonderful we have so many competing cryptocurrencies?" Or, "Uh, or we're, I What money is all about, you know, all this stuff. And again, you wish they'd read some of the people you just mentioned. Yeah, we're not saying these people wrote the Talmud, you know? They're not ne-- They didn't, this isn't chiseled in stone. However, I will say that these insights are just almost self-evident, that money is a network commodity. There will be, you know, there will, wouldn't, will indeed be, if, if, if, let's say tomorrow all the nation states of the world were to Their money operations, then there would indeed be competition out there. Gold might compete with, with Bitcoin, maybe other cryptocurrencies will compete, but they will soon enough become one dominant money because that's the way people deal with the world. We, we have short pencils, we just want one money, with which to deal, maybe two monies, but no more than two, probably one. And I wish, some of the crypto enthusiasts could recognize that.

Absolutely. I think that's a point I've, definitely, myself and some other, you know, Bitcoin advocates are very much, against, some of the altcoin gambling that goes on. And I think there's a lot of people who sort of sell these false promises about altcoins as though, you know, that they're gonna-- that there's gonna be this kind of, as though there's gonna be all these different monies. It's, it's, I think to some extent people are learning. So ninety,

yeah, ninety monies to choose from,

So, look, I, I think it might be also really interesting to discuss some of the debates that you have moderated. So, actually, I think the listeners might really enjoy discussing about, the debate. Now, this is a couple, I think this is one or two years ago, it's the debate with Eric Voorhees and Peter Schiff, right? And so it was sort of like a Bitcoin and gold debate, and one of the interesting, points that seemed to kind of go constantly back and forward, and I guess for many Bitcoiners would be sort of skeptical Shift's seeming inability to understand the point about there being no such thing as intrinsic value, right? He seems to constantly kind of refer back to this need that, you know, oh look, gold, you can make jewelry out of it, or you can do space applications and so on. And so his argument in that debate seemed to be that Bitcoin, you can't do anything like that, and so therefore, it's all just gonna go back to zero someday. Yeah. But what's your view there?

Well, yeah, it's good sequential. You began with the first Bitcoin debate we had, Check, it's probably climbed since then. that debate has had more than a half a million views on YouTube, and so perhaps a lot of people, listening to, this, discussion between you and me are already familiar with that debate. And that's, that just dwarfs everything else we've done. the recent Bitcoin debate we've had, has been very popular as well. Maybe it'll get up to half a million views, but that, that's off the charts for us. and, in that case, as you said,

between, somebody like Peter, who, who's loyal to gold, and, and actually, a, a very smart guy who funds the Sol form, Don Smith, spoke as well that evening. He's a, he's a, he's a Bitcoin bear, and, a-and they can't get past the idea that, that Bitcoin might not have had, independent uses as a commodity, and, and, and, and for that reason, because it's not had independent uses As a commodity in the way that gold had, then for that reason, it can't ever become money. And that, that I struggled with that a little bit, and, I, I don't think it's-- I, I perhaps it, it helped, for me to hear about, read about, Satoshi and recognize that he too understood that issue, and, and in particular, of course, we wanna add that, that, that, Satoshi solved the problem that Friedrich Hayek had unwittingly raised. Hayek wrote I wrote a book that the Austrians said was an embarrassment, the, the privatization of money, it, that wasn't quite the title, but that was the thought that the

denationalization of money,

denationalization of money, yeah, thank you. That it would have, that, that we could, we could have private organizations bringing out money. Rothbard, who was quite a joker, a Jewish guy from Brooklyn who liked to joke, said, "Yeah, I'm gonna bring out Rothbars, and everybody's gonna use ' But who's gonna trust me not to inflate the currency 'cause I could become fabulously rich if I just inflated all the Rothbars out there? And, and, and of course, Murray Rothbard had a point, and prior to Satoshi's coming on the scene, I gather they did indeed bring out, cryptocurrencies, which didn't have the constraint that Satoshi imposed on it, and of course, as your listeners know, there will never be more than twenty-one million units of, of cryptocurrency, of, of Bitcoin out there Yeah. And so he solved that problem that, well, you don't have to trust me, and you don't have to trust others, you'll have-- you can trust this, this absolute lock I've placed on the availability of Bitcoin, never more than twenty-one million units. And, and then he, I, I, I know that Bob Murphy, who's a esteemed colleague of mine, maybe he's been on your show, he's, he's of course, a very eminent Austrian economist, he said that, well, Bitcoin, Bitcoin just came from the dollar, just like other currencies Please do so. It's now built on the dollar, and now it has all the advantages of being free market and money. That's probably a good argument. the other, just part of it is that there was at least sufficient knowledge that this could be money. We're at an advanced stage in sort of human culture and civilization, and once Bitcoin was used to buy those pizza pies, then it became money. So it wasn't, I think, too difficult to cross that divide. And Peter, who, who has a lot of virtues, but I wish, I wish he would read a little bit more of the Austrians. I wish he would inform himself a little bit better. He certainly embarrassed himself, in front of Eric Voorhees, who was extremely gracious and extremely polite, who said, "I've learned a lot from you, Peter, but Peter, nothing has intrinsic value. and so for you to say gold is advantageous 'cause it has intrinsic value, that's ridiculous. Nothing has intrinsic value." I, I would, I would put it myself to say that you might think that food and water has intrinsic value. Certainly gold doesn't really, if gold isn't just gonna be used as jewelry, but how about food and water? Well, food and water don't have intrinsic value until you've decided that your life has intrinsic value. Like getting nourished has intrinsic value. If, if you wanna starve, if you wanna hunger strike, then they don't have no intrinsic value. If you, if you wanna die, they have no intrinsic value. So we have to, we have to make a, To us. And so again, nothing has intrinsic value. And Peter trotted out this naive statement, "Um, I use this term that's offensive to Austrians because, because what we left out of our, our little disquisition on the Austrian economics is that it recognizes the inherent subjectivity of all value. Nothing has value other than the subjective value we place on those things. So therefore, the only thing that they're hung up on is what I just mentioned, which is that gold is tangible. But gold has so many disadvantages, so much easier for the government to seize gold, it's a physical commodity to grab it from people. Bitcoin has its problems as well, but by and large, it has advantages over, over gold. And I think that justifiably then, Eric Voorhees won that debate according to Oscar cell voting, as, perhaps those who, who aren't familiar with their debates don't know, I use the cle- Yes, it Oxford style voting where through an electronic, app, people can vote, yes, no, or undecided on the resolution before the debate begins, and then the vote, of course, that you get in your favor counts against you, because the only way to win the debate is to, is to, is to score better, after the debate is over. We have a second, vote, and then you win the Tootsie Roll if the, if the vote moves in your favor more than it does in relation to your predecessor. As I- I recall, I didn't look it up before I, I started to talk to you, I think Steve, Peter lost a few votes and Eric gained, so that vote went to Peter. But do, do you have any special thoughts on that exchange and that debate?

Yeah, so I think, I, I like the way you summarized that. I think, essentially amongst the Bitcoiners, some of the work was written to sort of show that Mises was almost showing his work in some sense. So like, it, it doesn't, it's saying that once money has already People have already started using, ex- using it for exchange. It doesn't now have to keep having that, if you will, industrial use as gold has or whatever. I think that's kind of the way to think of it. Oh yeah,

yeah, and by the way, I, I will say something, tell a little bit of a tale out of school. when I, I gave Peter a hard time, he seems to have forgiven me for it, but I, I, I, I try very hard,

to, to be, If I walk into a debate where I'm sort of rooting for one side, more agree with one side than the other, as not infrequently happens, then I make a point of, whenever I'm aware, giving a harder time to the side I'm rooting for. If I'm, if I'm gonna ask a, if I'm gonna ask a challenging question, I always ask one of the other side. I, I try to lean a little harder on the side I'm rooting for, just to make sure that I don't betray any bias. I made a bit of an exception that evening when And picking up on what you just said, i-is gold. Gold does indeed have industrial and ornamental uses, but anybody can tell you that the price at which it trades, even then it was down only at about, what, twelve hundred dollars an ounce, the price at which it trades is way in excess of how-- what it would be valued at purely for its ornamental, and industrial uses. And I asked Peter, particular, don't you agree with that? Where, where would, where would the price of gold be? If, if it was not regarded as a monetary metal, and Peter said he didn't know, he didn't know. So I embarrassed him. I said, "Peter Schiff has just told us he has no idea what, what the price of gold should be, and he's the guy who recommends gold. So the, the guy is a goddamn billionaire, he's-- and of course, he only, we were talking about taxing, only pays a four percent tax living in Puerto Rico, so I guess he could afford a little grief, and he didn't, he didn't complain afterwards that I

Yeah. One other point I think, might be interesting to discuss. Now, one point that Sh-- Peter Schiff was making was this idea of, "Oh, what about, gold-backed cryptocurrency?" Now, many Bitcoiners are very anti that idea because, and let me explain why I think most of them, you know, most of us would say that's not, that's really missing the point, is that fundamentally, sound money, well, part of that is about freedom from government interference, and Bitcoin Is designed in such a way to resist that centralized control or getting co-opted, and I think as Bitcoiners we would recognize that there were many attempts to create private money that either got shut down or got co-opted, right? So if we can look at PayPal, Liberty Reserve, eGold, et cetera, I mean, the list goes on. I, what's your view there around, a theoretical gold-backed cryptocurrency and whether that, you know, doesn't make sense and really about Bitcoin's government resistance, if you will?

That, okay, now, now you're really opening a big question. I, I'm probably gonna duck some of that. I, I, you, you, what you just said is, shows that you're more informed than I about this idea of a, a mating the two of, of this hybrid gold-backed crypto. It sounds a little bit weird to me, but the point that you made sounds sensible to me, that it's not the best way to go. the only thing I could would wanna stress is, why, why we want, You know, the-- I would prefer that government dominate, the production of shoes than have anything to do with money. The shoes would pinch, but we could wear sandals. We'd even be willing to wear, walk barefoot. the history of money, and government is really that the kings wanted to fight their wars. they could tax the people to finance the wars, they could borrow from the people to finance the wars, but those were very awkward, difficult things to do, so it occurred to them to seize the people People's money, seize the gold, control the gold, and debase the currency and print money. And, and so really, money originated in the warfare state. and, I think Murray Rothbard was correct to say that we Austrians believe that it's no coincidence that the Federal Reserve was created in nineteen thirteen and the US fought its one of its, its first, one of its first major wars, World War One, in nineteen seventeen. the, the mu-- the ability to print money, His underwrites, major wars, he underwrote World War II, whatever you might think of the worthiness or lack of worthiness of World War II, it was indeed financed through the printing press. And now, most of course, as, as the welfare warfare state has developed, then, the, the ability to print money finances the welfare warfare state, and that's the reason why we believe that it's not just about money, it's not just about the aesthetic issue of not liking the government to be able to- To print money, we believe that it really has a lot to do, with, with the abuse of government, and that we'd even say to those people who aren't even, conversant in these issues, doesn't it bother you to think that the government, is, is so unanswerable to the people that it doesn't really have to worry about taxing and borrowing, to get money to, to finance its operations, it can simply print money, and so it doesn't, in that sense, it's in- Insulated from the will of the people completely. I mean, that's of course, if you're, you know, a conventional Democrat, if you're conventional, classical liberal or even a modern day liberal, isn't that deeply disturbing? And so for that reason, just as you indicate, we want the money of the future, to be workable, to be possible, of course, but we want it out of the hands of government, and of course, that creates a huge problem because, fighting government, government's gonna fight back. There will That gets into, of course, important issues about which I know something, but, maybe not as much as you and not as much as others, about how would, how-- I know that cryptocurrency, Bitcoin in particular, has a better chance, of becoming a free, a free market in money, better chance of, of staying out of the hands of government than gold does, but, I'm not sure of all of the ins and outs of that, of that question.

Yeah, totally fair enough. one other point that I think you, you might be able Earlier with the network effects point, is that, at one point in that debate, Peter Schiff was trying to say Bitcoin isn't really scarce because there's all these other cryptocurrencies. Oh, yeah. But at the same time, would we not expect, you know, in the same way that there are difference, differences causing, you know, degree, varying degrees of salableness in normal goods, we would see that amongst cryptocurrencies as well. And in our view, we would see it like Bitcoin is the most liquid one and the most decentralized one and has the most, you know- Best technology, but would you, would you s- would you say that's like a reasonable application of that idea that even amongst the cryptocurrencies, as you know, so to speak, there's really, there are differences amongst them, and in that sense, they aren't the same? Yes,

sure. And, and, I, I, I actually believe that in that case in particular, Eric Voorhees, I think, dealt pretty well, in parrying, what Peter said. certainly, perhaps Eric even said that, you It isn't really scarce because there's also silver, and indeed copper has been used as money. you know, you could, you could say, anything's not scarce because then you could just decide that, that those things that are similar to it but not the same, are, are, that it's all the same. But in terms of subjective, votes and subjective understanding, and it all gets back to human subjectivity. the fact that Bitcoin is in a class by itself, I think, is, is, is, Enough.

Excellent. I would love to talk a little bit about another debate now, a more recent one, is the, George Selgin versus Saftey and Amos debate. Now, the, George Selgin, George Selgin, sorry. and so the resolution was, "Bitcoin is poorly suited to the purpose of becoming any nation's main medium of exchange." And I guess one point that I saw, Dr. Selgin make was around Basically the transaction cost and the, the amount of time that it would take for settlement of Bitcoin, and therefore, and he was trying to say, well, look, they could turn to other alternative currencies before going to Bitcoin. And then I guess if I were to just represent Safedeen's view a little bit here, his view is more like, well, there could be many different central banks, if you will, or Bitcoin banks, and people may transact on layers above that, and they're not necessarily a-transacting directly on the Bitcoin blockchain. did you have any views around that or anything to share?

Yes, I wanna, I wanna address that. But, but, just as a, as a prelude, I wanna say one interesting thing that, I, I, I actually George Selgin, as a matter of fact, has been in-- done three debates at the Sol form. I've done four, but I'm, I've got a monopoly lock on it. But George, George has done three, and, and he's, he's very smart. I've learned

I'm surprised by one thing. I, I, I've, known him over the years, he's done book reviews for me when I was a parent, and he had told me, most recently, more than once, that his problem with Bitcoin was in fact that there would be no more than twenty-one million units, of Bitcoin. And, he, he told me he was convinced that- That what this meant, as indeed it does mean, that not only will prices of consumer goods and capital goods decline over time, because if there's-- if we get to over twenty-one million units, but if we, if we double and triple the amount of capital goods and the amount of consumer goods and services out there, then clearly as a matter of simple monetary math, those prices have got to come down, over time. And that's already a problem, by the way, even for, for, for, you know, quasi-free market people like the Chicago- School, just the very fact that prices will decline, but not so much of a problem for Austrians that prices of goods and services of capital goods will decline. we are able to explain to people, people would even ask us, "Well, if prices are gonna decline over time, how-- why would any capitalists want to invest in anything?" Then, 'Cause if he's gonna have to sell it for less in a year or two. Well, obviously the answer to that is that the capitalists work with the spreads. They'll pay for factors of production at a lower price, fact The profits, they're not stupid, but so therefore we can-- we have to get past that hangup, which is not George's hangup. George's hangup was that labor expands over time. We have twice as many people working, working now as we had in, nineteen sixty-nine. We're-- we will most likely have an expanding labor supply. So if in thirty, forty years, let's say Bitcoin becomes money now, and then thirty, forty years, twice as many people are working, that means compensation Labor compensation has got to be cut in half, and, that's almost unprecedented. It's almost never happened on a sustainable basis During the late eighteen hundreds, what happened was that prices came down, but, but wages more or less were flat. That's how people got richer, but we didn't have a cut in wages, in, in, in nominal wages. now that was George's hangup, and I spoke to his colleague, Larry White. His colleague, because Larry White and George are you, you're often linked, very thoughtful people with different views about fractional reserve banking, but they bring a lot of interesting, insights to the subject. And Larry- Gary agreed with me that George was getting a little bit too hung up, and that, and that it, and that the idea that, that people are gonna rebel against a cut in their wages, rebel against a situation in terms of simple math. Well, yeah, you're earning half as much as you did, you know, a number of years ago, but prices are now ninety percent lower of what you wanna buy, so you're five times richer. Are people that stupid? Are we gonna have labor union strikes? Well, not in a free market. So again, that, that I George was a little bit daft on that subject, but he was hung up on it. To my astonishment, so now I get to the Dana Moat, this long disquisition on George's daftness. To my astonishment, when he got up there to debate Safedean, he is going over the pluses and minuses of Bitcoin, and to my astonishment, almost the first thing he says is the fact that Bitcoin has a fixed supply of twenty-one million units. For that, it gets an A. I-- for that, it's a, it's a George, what are you, what did you, what were you saying for months on end to me about this? I had actually told Stephanie in advance, be prepared for that he's gonna say that, that it's unsustainable because it's got a fixed, supply and because compensation has come-- labor compensation hasn't come down. He didn't say that at all. And then I began to realize, George Selgin, as brilliant an economist as he is, is obviously a little bit buffeted by this subject of Bitcoin. I don't know if he can really quite make up his mind or quite put, Now I'm gonna try to answer your question, but, and, and this is in part something I learned from my son, Jim Epstein, who I mentioned to you, who knows a lot more about Bitcoin than I. My son, Jim Epstein, who is a, a producer at, at Reason TV and a, and a scholar for, for Reason, for Reason magazine, Reason Foundation. this is the thing, when, just as you said, when George said that the transaction costs of tr- of turning Bitcoin over are too great, Saf And did indeed fairly respond that George was, was, was making another naive error. He didn't recognize that, that consumer transactions, that most transactions that take place, can be simply accumulated in, over time, and that the, and that the real settlement of Bitcoin can take place in very large blocks, and that, and that therefore, this idea of George is that, that you're gonna buy, you know, a hundred dollars worth of stuff when you go to a- The supermarket, and that, and that it's got to actually be cleared a hundred dollars worth of stuff in terms of Bitcoin when you go to the supermarket, and that, that Bitcoin has got to be cleared, that, that hundred, that hundred dollar equivalent transaction, or that two Bitcoin equivalent, or one Bitcoin or half a bill, equivalent Bitcoin transaction has got to be cleared in the, in the classic sense is naive. What will happen is that, that financial institutions will accumulate those transactions, and then there will be clearance in seven Settlement at a much deeper level, you know, in terms of billions of bitcoins, I shouldn't have said billions, thousands of bitcoins or hundreds of bitcoins in much larger blocks, so that there will be no problem with respect to settlement, in Bitcoin. So I think that, and, and Safedean did indeed, I think, pretty clearly parry, George's point by responding in that way. But, but now, there is another problem, and here I'm gonna quote Jim Epstein, maybe you wanna have him on to explain it. I've asked Stephanie about it, and I think she's a little bit tone deaf about it. Stephanie then talked about, you know, but there'll be, there could be credit cards, there could be-- and he was right to some degree, there could be credit cards. He said, "Look, if you want to give your grandmother-- if, if, if some people wanna hold Bitcoin cash, if some people are old-fashioned and they need to hold, you know, Bitcoin cash or Bitcoin coins, there would be a market for that if there's a market for that, if they Jim Epstein was making a distinction in terms of the threat of government, and that, that gets back to what we were talking about earlier. Jim's argument is that, is that the Lightning Network has hopes of developing, a transaction mechanism for consumers for small transactions that could stay out of the reach of government, but that PayPal and the more conventional credit card companies are much more exposed. And, maybe you could talk, speak to that issue. so- Gene Epstein has hopes, that because he thinks that the Lightning Network has made advances and, and, and could, and could establish, a mechanism whereby we can transact in Bitcoin outside the reach of government, but that, but that Safedine was, was lumping the one with the other and not being sufficiently cognizant of the dangers of government interference. So that's the best answer I can give. I'm curious about your, your, your thoughts.

Sure, so I'm happy to, I can just give a very quick overview there. So the Lightning Network, we can think A way to open, think of it like I'm opening a tab with you, and I'm settling only the final transaction. Now, we can get into the technical parts, alright? So there's a funding transaction, there's a commitment transaction, et cetera, but we don't need to go into that level of detail. But I think the key point to understand is that the Lightning Network is just as, what we call trust-minimized as Bitcoin, it providing some of the-- You're, you're able to get that transaction into the blockchain to settle out your closing, closing the tab And so the cool thing with that is it can dramatically scale Bitcoin while still keeping many of the same, if you will, trust assumptions about Bitcoin. And so what it could theoretically do is imagine a world where we have no Lightning Network and we might need to be reliant on there being, as Saftey introduces, I think maybe, whatever, ten thousand Bitcoin banks, right? Maybe Lightning Network helps enable there to be even more Bitcoin banks, and then there are other technologies That are coming that will allow people to have different levels of, let's call it trust or security, and by delegating certain components of that, for, so for example, to a side chain such as Liquid, but again, I don't, I don't wanna get too much into the technical, components of it, but I think at a high level, the way we would think of that and explain that is that some of these technologies enable us to still transact denominated in Bitcoin, and, you know, it's not like fractional- Reserve, like Lightning is fully reserved, and in doing so, but still dramatically lower the cost of doing these transactions. Now that said, there's still work to be done on these things, but where most of our-- like, I'm, I'm bullish on Lightning, in case it's not clear, so I think, I think these things can be solved with additional work.

And, well, it'd be fascinating to hear you exchange your, your bullishness on Lightning, just as my son, Gene Epstein, is bullish on it as well In this sense, that his argument is that the Lightning work-work has the best potential, to, to be, outside the reach of government, to subvert government's power, to interfere. And that, and you feel that as well?

Yes, because I think fundamentally, one of the, if you will, things about trying to scale Bitcoin is that every full node must maintain a record of every transaction ever in Bitcoin. And The fundamental reality is that it's not possible to, in some sense, make every, you know, to scale that to every person's transactions directly on Bitcoin. But what we can think of it like is Lightning is taking some of those transactions off of Bitcoin's blockchain by, you know, as we mentioned, sort of doing like a settlement at the end. And what it's also doing is, there's another more complicated part which is it's not just I can open a channel with you, it's I can pay somebody like- You might have a channel open to somebody else. Let's say you had a channel open with Safteen, and I could-- and I don't have a direct channel with Safteen, I can pay through my channel with you to the channel with Safteen. And so that's called multi-hop, right? So again, getting a little bit more into the technical components of it, but I think if I were to just summarize the key point here for you, it would just be that we are able to- Dramatically keep Bitcoin more decentralized, and in doing so, it remains more government resistant. but yeah, but I'm also interested, to discuss, I think, because you, you made a lot of really great comments before, and I was interested to sort of dive a little deeper into one of them, is this question of the fixed money supply of Bitcoin, because it sounds like some-- So obviously there are inflationists out there, right? Like the Keynesians, and they will make this different, you know, sticky wages argument and- And, yeah, and I, I remember listening to a talk, by Dr. Guido Hulsman, and he was explaining how there is a certain wing, I think the Weizsäckerian wing, who might sort of believe in a, in a need for inflation as well, whereas I think most of us would believe there's no need for inflation. But I, I'm curious, d-d-do you see any similarities there between the view of Dr. Selgin around the, you know, the fixed supply and, the Keynesian sticky wages argument?

Well, that's a good question. a-and, as I said, there are, there, there seem to be two Dr. Selgens, that's the problem, right? I mean, he, he astonished me by completely dropping the argument, actually saying that the fixed supply is an advantage. And, and so, I, I don't know what to think. And as I, as I mentioned to you, Larry White, who's very much, a, in tune with George, a lot, I mean, their, Free market oriented, they both want the Federal Reserve to be abolished. they have mixed feelings about, Bitcoin. they, Larry agreed with me, that, that, that it's-- there's so many, you know, we now just have to think in terms of human action, of how people, will respond. What, what kind of, do, do we think that, that people, that, that, that laborers will, are gonna go on strike or quit an interesting job because the company says, that our prices and our, our, our, our revenue situation is such that we're gonna have to cut your nominal wage by four percent next year? but then we, we point out to you, however, that, that prices, most of what our employees are buying are down by thirty percent, and that therefore you're better off, but we're not gonna be able to employ you or stay in business if everybody objects, to the four percent cut. I, I'm, and it's difficult to imagine, what these people conjure up. What, what exactly is going to, happen? Is everybody gonna quit? is there gonna be a universal strike? What, I mean, it, do we, do we, I mean, are, are we gonna say that if labor unions, dominate the economy, I will The economy and, and they declare a universal strike because, because we, we can't cut wages, then I guess there will be, then the economy will come to a standstill. But, but we who point out that laborers actually do have a lot of power, that wages do rise, and real wages, that is, rise, because, labor-- laborers do have bargaining power. If, if you don't get offered enough by company A, you've got company B, C, D, and E to go to, then we point But on the other side of it, in this case, we should point out that labor won't have the power to object, especially if, if, if we get-- we, we want to imagine this learning period where people have got to get used to a situation in which nominal wages will decline, there would be massive attempts and massive interest on the part of employers To, to start education, to, to post things on the internet, to, to, to train people in the situation, to make the point that with only twenty-one million units, of, of money out there, revenues are necessarily gonna decline, but you're gonna get richer in the process. So difficult to imagine that people are that stupid or that the transition can't be made. But then, if you then wanna talk about the virtues of that, I think that Bob Murphy, again, the guy I just mentioned, who's pro-- I'm sure you're familiar with Who writes a lot in the Austrian tradition, he's pointed out that in a way, there's an, an advantage to the twenty-one million units because it, it means that for long-term planning, for, for, for annuities, for, for, for the purchase of bonds, for the figure, for figuring out where prices are gonna be, that's one element of stability in the marketplace that people can depend on, and it will probably mean then that in the long run, it will be easier to make long-term calculations about where the economy is going. So difficult for me me to believe that that's a problem. And I, I, although, I, I mean, I don't know, I mean, you tell me. Maybe, maybe Satoshi could have set it up so that there could be some gradual expansion of the money supply. But I do think that, that, that, the dramatic declaration that, that, that nobody can debase the currency because there will never be never more than, than twenty-one million units, is an extremely valuable thing to have said. And at the end of the day, difficult to imagine why anybody should- You'd have a problem with it. Clearly, the Keynesians have a problem with it because, because, because the Keynesians work for government, their whole livelihood is based on government, that's why I said earlier. At the beginning of this discussion, why they can only conceive of a world in which government dominates the money supply, because that's where their personal interests lie, and I think that's another key aspect of mainstream economics. Why don't I digress and point out that, that mainstream economics is marred by two things, the, the, the, the, the, the desire to sit at, at the tables of power, as manifested by John Maynard Keynes, who clearly was a power-hungry Every person who isn't fatigued with Nazi Germany and with the Soviet Union, he revealed this quite openly in his talks, and, the second problem with mainstream economics is that it wants to imitate physics, it wants to be esoteric, it wants to be mathematical. That's why they focus on equilibrium states so they can mathematize the economy. With that said, amazingly enough, with those two handicaps, the handicap of, of wanting to sit at the tables of power is indeed that you become an inflation Inflationism, because inflationism is good for the powerful. you, you see everything from a top-down perspective, you think you can manipulate the economy, 'cause that is where, you have the possibility of becoming chairman of the Federal Reserve or advisor to the president, so that warps their viewpoint. and, and then on top of that, their viewpoint is more, more warped by their mathematization. I, I digressed because you were initially asking me about their hang-up with inflation, and I believe it comes from that sort of intellectual disease. their desire to sit, sit at the tables of power. That's why Keynes called gold the barbarous relic, because indeed it was barbarous to somebody like him, it got in his way.

One point you were making there was also about entrepreneurs adjusting to the price level as it rises or falls, right? And so traditionally, I mean, in the world today, entrepreneurs who are doing long-term contracts, they may build in some kind of CPI term or some kind of inflation term. Now, in a, if we were to live in a growth-deflation world, like let's say we If we lived on a gold standard or a Bitcoin standard, then entrepreneurs could simply price in the other way around. Yeah. They could build in some kind of, you know, you know, decrease in the prices. but I suppose the point that, you know, if I were to steelman this point against that, they might say, someone might say, "Well, hang on, Bitcoin is too volatile. Why would anyone price in Bitcoin, right?" but I suppose the re- the rejoinder, what would your, thought be on that? Would it be that as

that had-- that was indeed a problem that, Larry White had. I mentioned Larry as, as a, as a, intellectual colleague of George Selgin. Larry's at George Mason University, a very good place. Larry, said he's working on a book about Bitcoin, and his problem is because of the fixed supply, it's very volatile in price. Actually, Saffordian had a very clear-cut response to that, and, you know, that, that, to elaborate on Larry's point. It's volatile in price compared to gold, and w- and gold, according to Larry, gold has the advantage of expanding its supply because there are indeed, you know, we have all the above ground gold, and then we have the mining of gold every year, so we have an ex-increase in the supply. and, and really, actually, Safian didn't put it as clearly in his debate with, with George as he did when he spoke to, my, my son and me, 'cause we met prior to that to learn a few It's really simply that if you can imagine, a, that, that the price of Bitcoin goes to, I'll pick a number easily, a million dollars an ounce, two million dollars an ounce, a-as it could, it, it obviously, is now worth what? I mean, at, ten-th- it's worth far less than gold is, and, but if, if in terms of actual value, it goes to very, a much higher price than today, which it will, if it's going Less volatile. In other words, if somebody wants to buy a billion dollars worth of Bitcoin today, he, he has a vast potential to royale the price. But if he wants to buy a billion dollars worth of Bitcoin when Bitcoin is worth several trillion dollars because of a very high price, a very high price that it would be appropriately given because it's going to become money, then clearly that volatility question goes away. And then of course, Safiye made another very good point, which is that, that, that Larry is making far too much out of the- The expansion of the supply of gold, the expansion of supply of gold adds like less than one percent a year to the supply because there's such a massive supply already there. The, the truth is, the reason why gold is less volatile is again because it's got the high price and the, and the huge quantity so that the capital value of all the gold in the world is such that if you're gonna buy a billion dollars worth of gold, then, then all of that value can absorb that billion dollars. Bitcoin will get there once it rises in price. So I think that was a fairly- Simple answer to what seemed to be a knotty problem.

Excellent answer. yeah, that's some really great insights there. Gene, I normally try to keep the episodes around an hour, but, are you okay to keep talking or are you,

Sure, I could talk to another few hours. I'm sure, I'm sure your readers, your listeners will go to sleep before I do. What, what else?

Well, actually, I was curious as well, if you've got any thoughts around what might be a good comparative for Bitcoin. And here I'm asking about things like, so, you know, base money, M2, M3, et cetera. you know, so there are different, I guess, ways to conceive I think it's called the true money supply. so, I mean, there are different, you know, comparisons. Do you have any ideas on, you know, typically people compare Bitcoin and gold, right? Gold has, you know, a, a, if you will, a market cap of something like eight trillion around that area, whereas Bitcoin today is, you know, a little bit under two hundred billion. What, what do you believe would be like a more appropriate way to think about the money supply?

Wow. Well, you used good numbers, so I wanna pick up on the

Capital value because it's low in price, but it could rise to a million dollars per Bitcoin and be comparable in terms of, of, of its capital worth, as gold is, and therefore it wouldn't be so volatile. But the, the, yeah, the point, I, I, I, of course, I'm familiar with, with, with, Rothbard's rather agonized attempts to, to count up the money supply in terms of what is most liquid and, I, I, I think that's an interesting exercise, but, the Subject is that we've been talking about gold as money, we've been co-talking about Bitcoin as money, and then we've been talking about, the US dollar, the, the, the euro, the yen, the Kanuck buck as money. and, and those are indeed, the-- what we use, because indeed, the US has, has a legal tender rule, and, and the legal tender rule is, is constraining, and the constraining rule is that, is that you and I, you and I could make a, a I will pay you bananas, for, for services rendered, but, b-because bananas aren't legal tender, I will have a, a much, more difficult time getting that contract enforced, and you will have a more difficult time, if there is a problem. but if it's legal tender, of the US, then, then, then you'd have a much easier time in the US courts getting that problem enforced. So, but I mentioned that only because by and large, when it comes to that moment in Which a transaction is made, the transaction is made in one of those currencies or the transaction is made in Bitcoin. And really, the only interesting part of this, this whole exercise, which I've been well aware of, of course, I'm aware of, you know, M1 by M1, in the classic, tradition of the, of the monetary economists, M1 is just, you know, cash and checking accounts, and that's, that's those are the immediate, uses we put to transactions and purchases. But But there's no question that you can use some other liquid things. For example, if you wanna, if you wanna, to put up margin to, to buy, to speculate in commodities, then you can put up T-bills, treasury bills, treasury bills which, which are very liquid, which, which, which, you know, you can put up, you know, thirty, ninety-day treasury bills, which are earning interest. So there is always potential to use what is called near monies. Near money, which is, that is very liquid, you can convert it fairly quickly, to money, and, and but it's earning something. So there will be a ne- a, a, a clear motivation to keep, your money in something that is earning some interest for you, that's working, for you. This gets into lots of different, complications having to do with fractional reserve banking. But the only simple point I want to make is that, yes, we will- We'll always live in that world. We will always live in that world in which, in which it will become, profitable for financial institutions to, to, to offer to people, ways of being in near money so they can earn a little bit of interest, and so that, that where they're, where they're, they're paying interest and where, where, why would I have the motivation to that? If I, if you and I are a financial institution, we want people to put their money with us, and we wanna offer them as many inducements to

That's segregating into less than a fraction of reserve banking, but I only wanted to make the more limited point that, that even in a world of Bitcoin and as in today's world, we do have near monies. We will certainly not have, hopefully not have, so many treasury bills out there because we have, you know, a government that's rapacious in borrowing money and it can flood, flood the, the economy with these short-term treasury bills that, that are liquid and that mature quickly and that can be used as, as, as quasi money, but, but we will What, w- different, different sort of academic discussions about how much, how much, medium exchange do we really have, even in a world of Bitcoin? If we have, however, twenty-one million Bitcoin, we will have-- put that in the center of the universe, and then just outside, we could have, certain instruments where you bought it with Bitcoin, but you're only holding that instrument that could be converted very quickly to money. So that will always be a presence, but I don't think in itself it's very decisive. If we have twenty-one million units of Bitcoin, we will always have some near monies on the periphery around it, but I, I don't think that makes a huge difference in terms of, of trying to figure out what is money. What Rothbard was trying to do was figure out what is money in this current economy, and, was it savings accounts, what could be converted, was it, you know, all of that stuff. Interesting exercise, but not really decisive for a world in which we have a free market in money.

Fantastic. And I think with that, we could also think of it like So right now, part of being a Bitcoiner is that you hold your own keys and that you are, verifying using your own full node. But I think the point to, you know, to sort of put that into the context of, this kind of the banking system, if you will, i-i-in a Bitcoin world, that there may be big Bitcoin, providers, right? So and the-- in some sense, they become like a Bitcoin bank, right? So the Coinbase, Zapo, and other, let's say, other big Bitcoin companies. but I think We know legal tender laws saying that, you know, you, you, you private individuals out there, you must regard a Coinbase Bitcoin IAU the same as a Zapper Bitcoin IAU, the same as a Bitcoin stored on your own full node with your own keys, which are different, right? And I think would, perhaps, the intuition there would be there might be a difference in the prices of these, and or at least there would be some difference in the consideration of these, right? I would say, you know, holding Bitcoin on my own keys is obviously That's real Bitcoin, whereas Bitcoin held for you by Coinbase, for example, isn't the same. Wow.

And I'm saying, and you're saying, when you say it's not, not the same, you're not saying that, that, that if you use the one, you'd have to pay more in Bitcoin for the same item, is that what you're suggesting? I don't mean that, right? Do you?

Right. No, I mean more, sort of in the-- I'm, I'm just saying in the sense that people sh- would naturally be more Some of these institutions to be like, hold on, are they doing fractional reserve here? I, I, did they really have the bitcoins that they claim to have? And I think that natural skepticism might drive people towards the self-custody, holding your own keys version of Bitcoin. Does that, does that make sense in your view or?

Well, well, well, well, certainly, if, if I understand your drift in almost all, certainly Salton and others, agree that clearly the, the, the free, that, that we are naturally- Conservative about our money. If, if that's what you're suggesting, if I understand you correctly, most people are, and that, and that there will be, on the free market, the, the, there will be dominant brands that will have to establish a re-reputation for safety and soundness. that it's, it's, it's the last thing that we want, to have to worry about is the availability of our money, to, to transact with. You know, we've got so many other considerations in mind. Again Is that the holding of money balances is actually a, a relatively trivial thing. We don't wanna hold money, we wanna hold only those money, only so many money balances as we think we need to make purchases with, and, and that means we're gonna keep them to a minimum and it does get back, but, but indeed, we want, we want that to be perhaps the least interesting thing about what we do with our money, even those of us who love to talk about investment and speculation, the, the least interesting thing, because that's simply what we have available to Oh, indeed. The whole-- I mean, just imagine a world in which all of those currency traders will have to look for something else to do with their lives. Wouldn't that be wonderful? Of course, obviously, in a way, we're really talking about closing down about eighty percent of those people who earn their money in finance, who trade, treasury bills, who-- I mean, so many things will become much simpler in the world, very, very nicely boring, and, and we can get on with our lives and do other things, rather than worry about, Such things, such matters. But if your suggestion is, is indeed that the free market will, will bring a safety and soundness, that's for sure. Although, I guess I'd like to focus on all of the eccentricities of people and, and then, you know, we begin, you know, that's what we're, we're stepping in with, saying, "Well, there might indeed be a fair amount of, you know, of Bitcoin cash, that people want to hold, that people, you know, want to hold, you know Computer, I mean, checkbooks, they, they, they would be, pretty much, con- obviously a response to the quirks of people when it comes to the way they wanna transact in money. But your point, point you just made, to the extent that I understand it, is, is well taken. Yeah.

Yeah. well, I guess even to that, there, there is a product out there called the OpenDime, right? And so people can, basically send bitcoins to an address, and it, it kind of is like a That, but you can literally trade that around. And so to your point around having, you know, cash and coins, open dimes and similar devices may be, able to fill some of that role. but look, I, I think I've kept you for a little bit longer than I, yeah. but we didn't talk-- The only thing

we didn't talk about, and the way I'm glad we ducked it, 'cause it's a little bit complicated, is, is the debate that, that George Sutherland had with

I guess I think you have pretty strong views, but, and, and I, my views are a little bit wobbly, probably compared with yours. But, maybe that'll be a discussion for another day, just to tantalize, our listeners. That's

right. That's right. We'll keep that for another episode. but, Gene, do you wanna just make sure you tell my listeners about the SoHo Forum, tell them where they can find you and what's coming up? And

by the time you're listening to this, we probably forum dot org or to, to reason, TV, reason video, reason, reason, podcast to listen to all of the debates we've had. I'm actually working on a collection of transcripts of some of our more interesting debates, which will include some commentary from me. We've had, over thirty-five debates so far on different topics, mainly of interest, of course, to libertarians. my big confrontation is gonna happen at NYU, a much Much bigger hall than we usually use. We usually, hold these debates at the Subculture Theater on Bleeker Street, which seats, a little over two hundred. this, this debate on socialism is going to see it going to be at Kimmel Hall at NYU, which seats nearly five hundred. I would like to attract a lot of socialists to the debate. That's gonna be, November fifth. the other big one that's that, that where we sold out so quickly that we're renting a much bigger hall. This, in this case, Uptown, it will be the debate between Scott Horton and, and, and William Kristol. William Kristol, is known certainly in the US, maybe in Australia, as being perhaps the most prominent neoconservative in our country on the subject of foreign policy. And so I was quite grateful to him for consenting to debate, a rebel, a brilliant genius rebel on foreign policy like Scott Horton. And as soon as I announced it, we sold two and a Fifty tickets within a couple of days, we're now up to five hundred tickets, and it won't be until next May, so that will be a big debate, that we're gonna have, and of course, you in Australia, if you can't make it to New York, you can always listen to our debates, and as I say, we've got thirty five that we've done, and, all of them, I think, of interest, some of more interest than others. The ones that I just, that you and I just discussed, Video.

Fantastic, I've really enjoyed speaking with you, Gene. Thank you so much for joining me today.

We'll do it again, next time fractional reserve banking. Talk to you soon. Bye-bye.

I hope you enjoyed the discussion with Gene. Just a quick announcement, are you running your own Bitcoin full node? Have you figured out how to connect a hardware wallet to your full node? As some of you know, my co-founder Katad and I recently set up an Australian Bitcoin education company, Ministry of Nodes. We ran some in-person workshops to teach Bitcoin and And got some awesome feedback. We wanted a way to scale this up over the web, so now we're announcing the Ministry of Nodes Self Sovereignty Webinar. The first one is coming up on the 2nd of November, Saturday afternoon or night for the people in the US, and that will be Sunday morning, the 3rd of November for Australian attendees. It's Bitcoin only for payment, it's priced at six hundred and fifteen thousand Sats or approximately fifty US dollars at the time of recording. And yes, shout out American Hoddle for inspiring our pricing. So it's a seven hour webinar, including some time for breaks, and it's targeted for beginners or perhaps some intermediates who want to learn how to set up their own node and get practical advice and guidance and tips on how to self-custody Bitcoin. You might be coming at Bitcoin from a more economic or finance perspective and be less technical, or you might be on a Trezor or a Ledger and not be clear on how to run your own node and how to validate your own Bitcoin transactions. Learning about Bitcoin is like drinking from a firehose, and there are lots of traps along the way. Let us curate and teach you the material so you can confidently put it into practice. Go to ministryofnodes dot com dot au and click workshops to sign up. Lastly, subscribe to the podcast, find the show notes and transcript on my website, stephanelivera dot com. Thanks for listening, and I'll see you in the citadels.